Jay, yes indeed the rebate can be cash back; however, the lender can object to this method. To avoid any possibly of mortgage fraud, it's best to make note of it on the HUD-1 -- whether it is cash back or a credit; this is where some, if not many, lenders will balk at the cash back and want it to be handled in a different manner (credit).

When I give rebates, that is the approach that I use to protect my buyer -- and of course myself.

The buyer attests to this statement at closing by signing the HUD-1:

"The undersigned hereby acknowledge receipt of a completed copy of pages 1 & 2 of this statement & any attachments referred to herein. I [BUYER] HAVE CAREFULLY REVIEWED THE HUD-1 SETTLEMENT STATEMENT AND TO THE BEST OF MY KNOWLEDGE AND BELIEF, IT IS A TRUE AND ACCURATE STATEMENT OF ALL RECEIPTS AND DISBURSEMENTS MADE ON MY ACCOUNT OR BY ME IN THIS TRANSACTION."

Thu May 22 2008, 14:04

In CALIFORNIA I have seen cash back given to the Buyer coming out of the Buyer Agent's side of the commission. The DRE did approve this but I am too happy with the decision (a lot of times the Buyer has "connections" within the group of people involved in the transaction and it is not really fair for the Buyer's Agent to take a hit on the commission to give a "Present" to the Buyer at Closing). You have to remember that it is at least a 4-Way Split with the Selling Side offering a certain Commission to the Buyer's Side....after the Split between the Broker/Companies then there is the deduction for Expenses before the Buyer's Agent gets his "Net" check.. Just stating that you are getting 2/3rds Cash back looks a little Fishy since it could be 2/3 of the Net paid to the Buyer's agent. Or, is it 2/3rds of the Commission offered to the Buyer's Side? It sounds like a "Trick" to me but the DRE is allowing a few hundred dollars back to the Buyer as a "Gift" at Closing.
You have to remember that there is a Front End and a Back End to the Loan as well as to the "Deal". This is where you can save money on buying a property. Plus, a Good Buyer's agent will write the contract to give you "Protection" as well as getting any needed repairs done.
CONCLUSION: The DRE does allow a Cash Back to the Buyer and it is a nice Gift at Closing Time. Just "Writing the Contract" involves a lot more on both the LOAN and the DEAL, though. You could be losing Thousands of Dollars just to get those few hundred as a 2/3 cash back "Trick".

Thu May 22 2008, 13:31

Have you discussed with your lender if it can be cash back? While rebates are legal, your lender may require it to be a credit against settlement fees, an interest rate buy-down for your loan or a reduction of the sales price.

Regarding who pays commissions, the buyer does indeed bear some of the burden for real estate commissions through the price of the home. If you want to negotiate your buyer agent’s portion, that is acceptable so long as both parties understand what services are to be rendered based on the rebate to be given. It would not be wise to focus solely on the rebate amount, inasmuch as the buyer could be left vulnerable throughout the transaction. You can strike a good balance between a buyer’s agent who is focused on getting you a lower price and a rebate too.

Thu May 22 2008, 12:40

A GOOD BUYER'S AGENT will actually SAVE the BUYER more than what he/she gets from Commission. You have a 2-way split of the Commission between the Brokers and then an Agent Split based on a percentage less a bunch of expenses. So, the "Net" to the Buyer's Agent can actually be a very small amount especially if numerous homes were shown (Gas and Maintenance and the equipment to do this job doesn't come cheap).
A Buyer's Agent writes the contract to take advantage of front end and back credits on the Deal and the LOAN. These credits will typically be more than the Commission amounts paid to the buyer's agent by the Listing side.
On top of that, there is Errors and Omissions Coverage...there are no perfect homes and errors are sometimes made. If you have only the listing agent, the listing side covers up the problem; if you have a good buyer's agent, you have a lot more protection.
Yes, there is a long list of items that the Buyer's Agent does and the Commission structure is actually UNFAIR to this side.
There are Listing Agents that do nothing but go out and plant Signs in the Ground; and, those are the ones that should be giving 2/3 Cash back on their Commissions!

Sat May 3 2008, 16:39

Hi Jon and Jared,

Please keep your language and comments appropriate to this forum. Please see the community guidelines at http://www.trulia.com/guidelines/.

Best Wishes,

Leslie Taylor
Trulia Voices Moderator

Thu May 1 2008, 11:37

Newportfiji, are you a Realtor? Do you have your real estate license? If not, what part of the real estate profession are you in?

A large percentage of the applicants DO NOT pass the State real estate exam. Many of them try a few times and many never pass.

Wed Apr 23 2008, 09:15

There have been several comments essentially that Realtors are professionals, are vital to the transaction and are well worth their commission on the buyers side. I am not surprised realtors on this site would defend their own and make broad statements of their competency and high ethical standards. In my opinion, the quality and competency of realtors decreased with this housing bubble.
Starting a few years ago, you had a number of individuals grab a real estate license as a way to make a quick buck. Typical salespersons saying what they needed to close the deal – akin to a used car salesman. Licensing standards are rather lax in California and I would opine that most high school drop outs could pass the salesperson exam with minimal effort. I haven’t seen the actual statistics, but I would estimate that most realtors don’t even have a college degree or a rudimentary understanding of finance or real estate law. I realize I am painting realtors with a broad brush and there are competent and ethical realtors. But, most Realtors are not worth a 3% commission in their "representation" of their client. In most cases, if they buyer asks their broker to rebate 25% of the commission, they are being generous letting the Realtor keep the 75%.

NewportFiji

Mon Apr 14 2008, 16:20

Jared,

I am proud to say that I can look all of my past clients in the eye - the majority of them become friends!

There has only been one client that I have refused to work with - I told them they needed to find another agent and this was AFTER I had dedicated a lot of my time to trying to find them what they wanted.

The buyer is not the one who pays the commission - it is the SELLER, but I'm not wasting more of my time trying to educate you on how this process works - you have your own opinions, misguided as they may be.

I certainly wouldn't tie myself to someone before I determined we can have a good working relationship and I have to agree with JR about the 4%

Wish you the best!
Dot

Mon Apr 14 2008, 09:11

You got me there elv!s, I can't count :)

Mon Apr 14 2008, 08:27

Jared: Dot... I have seen agents do a wonderful job so that it seems like it does itself. Especially the part where they can't manage to refill the flyer box.
The flyer box of course assumes that the sign post is still standing in a somewhat vertical position. It also helps if the sign is attached to it I guess those are those free things you guys do though? Some of you can use your fancy key to open a door with or without research. Especially after you do all that research on a house YOU represent. It's probably been on the market for 200+ days so you can follow me and I'll show you how to get there without printing a map.
I love being helped, but I don't like shellin' out $10,000 because you opened a door.


JR: Jared, head on over to the housing forum athttp:// www.craigslist.com, you'd feel right at home, there.

Mon Apr 14 2008, 07:39

Jared: J R, If you want $8.50/hr I'll consider signing a contract when I walk in the door. If you want 3% you better do something first. If you don't want any money, just tell me no.

JR: OK, "no."

Jared: Agents have done it before. To answer your question, before I got my job I submitted a resume, took an interview, took a test, did another interview, negotiated wages, started a training regiment, and still had a 3 month probationary period.

JR: All that for $8.50 an hour? I just had an offer this weekend from a buyer. They've seen about 50 properties, I've negotiated 2 other offers that went nowhere, and now this one. Do you think I've earned my 3% there? Last month I had a buyer walk in, ask to see a house, I showed them 5 and they bought one. I got 3% there, too. Doyou think that happens every day? The last time it happened with me was 5 years ago.


Jared: If you want me to sign when I walk in the door because you answered an ad in the sunday paper, had a class on VHS and passed the test to get a real estate license, then managed to get your number picked by the receptionist when I walked in the door?

JR: No way. I don't have anyone sign the first day. If they turn out to have an attitude like yours I'd be contractually bound to them and I wouldn't want that.

Jared:Oh yeah, you gave me a bottle of off brand water with your logo on it. As for your full price mechanic analogy, if I call a mechanic and say, "put a new starter in it," I don't want to be charged for the diagnostic.
I can read a multimeter and did it before I called him. But then again, I can replace a starter. I can move a junction box and light switch too.

JR: Good let's see you try that at FIrestone. It didn't work for me.

Jared: You must sell those KB style "custom" homes.

JR: Is that supposed to be some kind of insult? Sorry, I don't get it. I get you though. I wouldn't work for you for 4%.

Mon Apr 14 2008, 07:36

Dot... I have seen agents do a wonderful job so that it seems like it does itself. Especially the part where they can't manage to refill the flyer box.
The flyer box of course assumes that the sign post is still standing in a somewhat vertical position. It also helps if the sign is attached to it I guess those are those free things you guys do though? Some of you can use your fancy key to open a door with or without research. Especially after you do all that research on a house YOU represent. It's probably been on the market for 200+ days so you can follow me and I'll show you how to get there without printing a map.
I love being helped, but I don't like shellin' out $10,000 because you opened a door. Part of the reason attorneys are more popular in CA right now is that they are being hired to attempt to correct all the disclosure problems you failed to mention. Like when realtors flipped the house 3 times to negotiate a better price for me? How many people were told that you can't negotiate quickly because the strawbuyer is out of the country? How 'bout when you asked if I wanted fries with that house in 2005, because if we didn't close this right now, no questions asked, someone else would. I guess you probably worked pretty hard to recommend your appraiser and finance company though. I'm sure no realtor ever took reciprocity or a plain old fashioned kickback for that. Realtors(R) (I love the (R), all adhere to a "strict code of ethics." If they don't we send the to a commitee for a spanking. Who knows, they might finnish that commitee before the feds pick you up.
If you can't understand my attitude It's because you didn't see the forest for the trees as you rode the boom up. People paid realtors fortunes and emptied their retirements because "looking out for my best interest" never included basic math. "Now's a great time to buy!" Now's a great time to forclose!

Do you look a former client in the eye when you show their short sale to a prospective buyer who also can't afford it? Do you still represent that client on the short sale?

Is there reason to reconsider trust in Realtors? Yup. I'm not saying they're all bad, but if your a good agent you better sell me on it before you think I'll sign anything. When a working man comes in to your office after a day in the real world and you have the nerve to tell him that you Deserve one to three months of his pay immidiately, don't be so shocked when he isn't happy to jump on board with it. "Just follow the black mercedes convertible" loses that certain ring. I do have an idea of what you do, it's just not prudent to mention half of it.

Mon Apr 14 2008, 00:29

Jared, thank you for your response - you proved my point - you have no clue about what we do. Possibly you have seen agents do their job so well that it all seems so simple.

I guess I just don't get your attitude. I love helping people and that is one reason that I love being an agent. I have the privilege of meeting people from all walks of life and helping them achieve their goal of homeownership and/or investment. I really see no reason for the animosity you show toward Realtors. I told an attorney the other day that Realtors seem to be hated almost as much as attorneys!

And, for the record - I would never go show any property without doing some research first. I put a lot of time into training and education on an ongoing business and most agents I work with do the same whether it is required or not. And, yes, we do have continuing education requirements.

Any agent doing a transaction in this state had better know what disclosures are required or we have a lot to lose by not doing what is required by law. By the way, those same disclosures are required whether an agent or an owner is selling the property.

Sun Apr 13 2008, 23:49

Just to clarify.. My Selling Agent might be my buying agent too. Only a verbal agreement so far and since she is out of the area she doesnt have access to the local key boxes.

Jared, Thanks for your last comment!

I have bought without an agent before and sold without an agent before. I know some REOs dont care about buyers commissions so I figure I can benefit from it.

I know there are good agents out there but I dont think its a very complicated process.

Sun Apr 13 2008, 23:21

J R, If you want $8.50/hr I'll consider signing a contract when I walk in the door. If you want 3% you better do something first. If you don't want any money, just tell me no. Agents have done it before. To answer your question, before I got my job I submitted a resume, took an interview, took a test, did another interview, negotiated wages, started a training regiment, and still had a 3 month probationary period.
If you want me to sign when I walk in the door because you answered an ad in the sunday paper, had a class on VHS and passed the test to get a real estate license, then managed to get your number picked by the receptionist when I walked in the door? Oh yeah, you gave me a bottle of off brand water with your logo on it. As for your full price mechanic analogy, if I call a mechanic and say, "put a new starter in it," I don't want to be charged for the diagnostic. I can read a multimeter and did it before I called him. But then again, I can replace a starter. I can move a junction box and light switch too. You must sell those KB style "custom" homes.

Dot. Theres no prep work for, "I just drove by 12345 Abandoned Shack Rd. The sign out front said Starving Agent Realty so I thought you could let me in to see the place." Get the keybox code from your receptionist and let me look at the place, or if it occupied set up a time for me. As for your list:

1) negotiate on your behalf
I'll give them $XXX,000 as is, pending inspections and lending. No further negotiation necessary.
2) Make sure that disclosures are delivered (do you know what disclosures need to be provided in the State of California)
Do I know that you do? The whole Idea of a disclosure is that they tell me or THEY are liable.
3) Make sure that the inspection(s), appraisals, and other items are done in a timely manner as time is of the essence on our purchase agreements
If they aren't are you gonna give me a notice to perform? "Hey Mac, can you do an inspection on tuesday at 2:15."

4) Work with escrow
This is a reason you get paid.
5) Make sure that ALL required documents required in a particular transaction are signed and copies go to all parties.
You get paid for this too.
6) Make sure the walk through is done and any potential problems headed off at the pass
Ahhh, walk throughs. "I thought you said the hole in the wall was fixed?"
7) I forgot to mention - work closely with your buyers lender to make sure everything is moving along smoothly and that your buyer is pleased with the loan product they are receiving
My bank will cut them a check when they are happy with the house and terms. (and look, you did remember to mention #7)
8) Make sure that repairs are completed satisfactorily including going to the property to let repairmen, inspectors, etc into the property
Tough, I bet they teach long classes on unlocking doors and making sure he doens't steal pipes and wires. The sellers agent better handle half of this if they want to get the house sold too.
9) To protect the best interest of the buyer every step of the way
Thats 3 good reason to hire a buyers agent, but for how much is still TBD.

I heard that test is tough. My wife studied for a few hours for it, but so did the rest of the state. 3 courses... wow, thats like a whole quarter of college, only not at a university but instead the Holiday Inn or Blockbuster video. A background check... the same one pizza guys take, but not quite as hard as the one I passed to get this job. Fingerprints so I can be found after I take your stuff...Livescan takes 30 minutes, my pest controll guy and gardner have to do it too. $180/year for a supra key... man you have to sell like a $6,000 dog house to pay that. I should definitely give you $10k so you can use it with me a dozen times.
Did you guys forget that 5 years ago half of the RE industry in CA was washing cars and waiting tables? Putting on a new suit is hardly 6 years of school. Paying for the Yun propoganda doesn't make you an authority.
Realtors here are remembering paying rent in a slummy apartment with roomates and fretting about their BMW payment. The don't have to focus on this too long to become aware that boom and frivolous paychecks are over. $12/hr is starting to look pretty good to some of them I bet. On another note, In this land of David Crisp (many friends worked for that jem) people have plenty of cause do doubt your motivations.

Sun Apr 13 2008, 22:44